Investing to End Modern Slavery: A landscape assessment and roadmap for increasing investor engagement
Modern slavery is so rampant across the globe that twice as many people work under forced labor conditions today, than were brought to the Americas during three centuries of the Atlantic Slave Trade. It is embedded in almost everything we consume, and continues to proliferate in its many forms, such as debt bondage, sex trafficking, prison labor, and forced servitude. While little has been done to put an end to human trafficking and modern slavery to date, politicians, lawyers, and the public are finally recognizing its pervasiveness and calling for companies to do their part to put an end to this inexcusable exploitation.
Now is the ideal time to focus, strengthen, and expand investor engagement to make eradication of human trafficking and slavery a top corporate and political priority. Recent modern slavery disclosure regulation and newly-developed benchmarks are making more data on corporate activities available to analysts and investors. This data can be used to inform investment decisions and to spur shareholder advocacy on human trafficking and slavery. Complementing increased investor engagement by the sustainable, responsible, impact (SRI), and faith-based investment communities, is the need to widen and coordinate the scope of investors involved to include large institutional asset owners and managers. An increase in engagement by a wide pool of mainstream investors will send a strong message to corporations that this is a serious material risk and they can no longer sit idly by.
Legislators in the United States and the United Kingdom have passed laws that mandate corporate reporting to address human trafficking and slavery in product supply chains. Media coverage, consumer backlash, class action lawsuits, and a U.S. government-published list of products made by forced labor, are exposing human trafficking as a material corporate financial risk—not just an ethical one.
Shareholders have the power to ensure that their investments are not at financial risk due to company ignorance of – or support for – human trafficking and slavery. They have a unique opportunity to halt a major flow of capital that sustains exploitative practices, and direct it toward ethical and empowering employment. Investors also bring a unique and valuable voice to policy debates about how business practices should be regulated to prevent human trafficking.
For this report, Patricia Jurewicz, Vice President of Responsible Sourcing Network (RSN) and Michael Passoff, CEO of Proxy Impact, conducted web-based research and interviews with shareholder advocates, investors, proxy analysts, industry service providers, grant makers, and nonprofit organizationsthat either directly engage with corporations on these issues, or support an aspect of corporate engagement. Based on their research, this report:
ASSESSES THE CURRENT LANDSCAPE of investors and key stakeholders active on human rights issues, strategies and tactics employed, issue areas prioritized, current standards, soft laws, and legislation related to human trafficking.
IDENTIFIES GAPS in current understanding, tools, and activities that, if filled, will strengthen the impact of shareholder advocacy and corporate actions in addressing human trafficking; and
OFFERS RECOMMENDATIONS for how SRIs, pension funds, mainstream investors, and philanthropic funders can support expanded and more effective investor engagement to influence the activities and efforts of publicly-traded companies to curtail human trafficking and modern slavery linked to their business practices. The main recommendations are:
Utilize newly available data, benchmarks, and technologies to inform investors, increase company engagement, and influence portfolio decisions.
Increase coordination and capacity for shareholder engagement, impact, and coalition building.
Widen the scope of investors taking action to include large institutional asset owners and managers by strengthening the financial argument.
Injecting resources, coordination, and energy into these three recommendation areas will provide information, incentives, and momentum to take investor engagement, outreach, and impact to the next level. Supporting a more in-depth understanding of the financial risks and impacts associated with human trafficking and slavery in business practices is a critical foundational need to build the case that modern slavery is a material financial issue, not just an ethical one.
Committed investors and their fellow stakeholders can build and disseminate the financial argument against slavery, point to benchmarks that track progress, identify industry leaders and laggards, develop best practices, and expand investor engagement to have the issue addressed in every corporate boardroom. Now is the time to enhance coordinated actions and leverage financial markets to eradicate human trafficking and slavery once and for all.